Summary of Efforts To Recover U.S. Government Costs in Foreign Military Sales

U.S. foreign military sales (FMS) have increased significantly in the past decade. Under the International Security Assistance and Arms Export Control Act of 1976, the Government is required to recover its costs in FMS. The Secretary of State, under the President's direction, is responsible for supervising and providing general direction for the conduct of U.S. military export sales, and the Department of Defense (DOD) is responsible for program administration.

DOD has recognized its responsibility to recoup from foreign buyers all Government costs associated with sales. Pricing guidance has been established and cost recoupment criteria have been expanded and strengthened, thus increasing cost recoupments. DOD believes that current FMS pricing instructions and practices of the military services adequately implement requirements. Although DOD has taken considerable corrective actions based on earlier GAO reports, ineffective implementation of pricing policy is still a primary cause of inadequate recoupment. The chief problem is in inadequate implementation of policy by the military departments and insufficient followup of cost recovery practices by DOD policymakers. (HTW)